Below is an interesting talk by David Heinemeier Hansson of 37signals about his philosophy for making money online. In case you don’t have time to watch it, here’s a summary:

• Go for the millions, not the billions, and sell subscriptions rather than giving stuff away for free.
• Target small and medium sized businesses, not large businesses or consumers.
• Focus on a simple problem that these businesses have, and execute well.
• 2,000 customers x $40/month x 12 months = ~$1,000,000 per year.

Via Joe Wikert’s blog I learned about Amazon’s new TextBuyIt service. Basically, in the US, you can buy stuff from Amazon by sending them a text message from your phone. They search for what you texted and send you back results, then you send another text to choose which item to buy, and finally Amazon gives you a call to confirm the purchase.

The idea seems to be that when you’re in a regular store you can check if Amazon has an item that you want at a cheaper price. It might be handy but the whole process seems a bit clumsy, especially compared to just walking to the checkout counter and buying something. However, in Japan my cellphone has a barcode reader (via the phone’s camera). It only works for special QR codes but I don’t see why it couldn’t work for regular barcodes as well. This could streamline the process quite a lot — just scan the barcode with your phone, enter a PIN number for security, and the ordering from Amazon could possibly be done without the extra two steps in Amazon’s process.

Obviously, retailers wouldn’t like this very much. They could retaliate by deploying cellphone jammers, but that would annoy their customers. More likely, they could drop barcodes and switch to encrypted RFID tags that can only be read by the store’s scanners.

Actually I’m not exactly sure how successful phone-based substitution of online for offline shopping would be. Given that people are already in a store, they’ve already incurred the cost of getting to the store, so that cost is sunk and irrelevant to their decision about whether to buy from the store or buy from Amazon. This nullifies part of the advantage of online shopping (saving you the cost of going to a store). Also given that you are at a store, the store offers truly instant gratification, whereas Amazon involves a delay of at least a day, or more if you don’t want to pay expensive shipping fees. Thus there are some factors stacked in the store’s favour, and Amazon would have to offer a low enough price to offset those. The key question is whether the economics of online versus offline retailing allow it to do that — is Amazon’s technology sufficiently efficient relative to a retail store that it can offer a low enough price that gets consumers who are already in a store to buy from it? It will be interesting to see how this plays out.

Remember when you were a teenager and your parents embarrassed you by trying to be ‘hip’ and ‘cool’ in front of your friends? That’s exactly how I feel about Time Magazine right now, with their list of Top 25 Blogs. Nevermind the fact that the list is highly subjective and excludes many great blogs. The problem is that the 25 different blogs are spread out on 25 freakin pages, plus an intro page. That’s 26 clicks to view a boring list of blogs, most of which everybody knows about already. (Yes there is a link to see the entire list in one page, but it’s buried).

As I wrote the other day, every click is a price. Hands up who is willing to pay 26 clicks for Time’s list? I wonder how many people clicked more than one or two times. In the talk by Aza Raskin that I linked the other day, he doesn’t provide any hard data but he mentions that when the NY Times breaks a story into more than one page, the number of people who click through to the second page is dramatically lower than the number of people who view the first page. If the demand for high-quality NY Times stories drops off so much after just one click, I hate to think about the click-elasticity of demand for Top 25 Blogs lists.

Of course all this is driven by the traditional publishers’ revenue model, and Time is not the first website to publish a “Top X of Y” list spread across X different pages. They get revenue from advertisers based on the number of pageviews that they generate. So they have this incentive to split things up across pages. This is understandable, but I wonder if 26 pages really is more valuable than one page, given that not many people will click through, and those who do will be so exhausted from clicking that they won’t even look at the ads.

More evidence of my psychic powers of thinking of other people’s internet business models just slightly after they have: Dropbox. Just yesterday I was thinking how backups are such a pain, and I wish there was a really simple way to do it online. A service that would just take care of backing up selected folders to an online storage service automatically. And keep my files synced across multiple computers, plus allow me to share stuff with other people. I would definitely pay a subscription fee for such a service, if it were reliable and easy and offered a decent amount of storage.

Dropbox does exactly these things. It’s still in beta at the moment, and they don’t say whether it’s going to be free (presumably ad-supported) or subscription. Personally, I would prefer a subscription service. I don’t want people trawling through my backup data to serve ads at me and would be willing to pay a fee instead. Maybe they could offer both models.

I really think online backup is going to be a big market. Imagine a kid born today, how many gigabytes of digital photos and video are they going to generate over their lifetime? Now think of the problem of keeping all that data backed up for decades. What a massive headache. I think many people will pay $20 or $30 a month to make that pain go away. Why don’t ISPs offer this kind of service and bundle it with Internet access?

Yes Apple’s Time Machine software and device are very nice, but they’re fixed to a physical location, they have limited capacity, they’ll wear out over time, and they’re probably in the same place as your data (no good if your house burns down).

How much extra would you pay for an iPod that has unlimited access to all the music on iTunes?

Personally, I think I’d be willing to pay up to 50% more than the price of the iPod alone. I reckon this could be a pretty successful business model. Unfortunately, I recently bought a new iPod. If this rumour is true, I hope they offer an upgrade for existing iPods as well as selling it with new ones.